Countrywide, Pennsylvania deal disputed-WSJ

Aug 11 (Reuters) - The U.S. Department of Justice has challenged a deal Countrywide Financial Corp has cut in a Pittsburgh bankruptcy court, saying the home lender was trying to silence a critic, the Wall Street Journal said on Monday.

The paper quoted Justice Department lawyers as saying that the nondisparagement clause in Countrywide's settlement with Ronda Winnecour, the Chapter 13 trustee for the district of Western Pennsylvania, "may impede, impair or otherwise chill witness testimony in the U.S. Trustee's ongoing investigation of Countrywide."

The provision binds Winnecour, a court official who monitors consumer bankruptcies, to a promise not to "in any manner, whether directly or indirectly, disparage" Countrywide, and to also ensure her employees don't criticize the company, the Journal said.

Bank of America Corp (BAC.N) paid $2.5 billion in July for Countrywide, which was the nation's largest mortgage lender.

Last month, Countrywide Home Loans agreed to pay $325,000 to the Chapter 13 bankruptcy trustee in Pittsburgh, settling a matter that accused the lender of abusive practices in almost 300 mortgage loans overseen by the court.

Winnecour had asked the bankruptcy court to impose sanctions against Countrywide, after pointing out that the largest U.S. mortgage lender had lost or destroyed more than $500,000 in checks paid by homeowners in foreclosure from December 2005 to April 2007. (Reporting by Tenzin Pema in Bangalore; Editing by Erica Billingham)